When they come up with an on-line 12-step program for bloggers, I’ll be signing in with a my name is nowdoucit and I google – and, suppose I’ll be required to admit that I went on an ACC binge after Proximo post this comment responding to my mention of the ACC clause in a post I put up today.
To win this argument one has to believe the insurer’s “sneaked” this language into the policies when AG Hood and others weren’t looking or that it is sooooo very deceptive that they didn’t know what it REALLY meant…Yeah, ACC is a bitch to understand but it wasn’t put in there the week before the storm hit.
Bitch to understand is right – just check that thread and you’ll see several comments from Brian Martin, including one that, when considered with the text from the State Farm wind/water protocol Proximo posted later, leads me to believe NFIP claims should have a different adjuster when an insured has other policies in place.
One certainty at this point is the ACC is not new. Brian confirmed that and so did Robert Hunter, director of insurance for the Consumer Federation of America, quoted in Home-Insurance Traps published by Consumer Reports.<span
“I knew the clause existed but I did not understand it, in part because it is so illogical. And I am an expert,” Hunter adds. “Imagine what consumers don’t know.”
Rather than imagine, I read Why Are Insurance Contracts Still Incomprehensible? posted on the TPM Cafe.
Much of this litigation and legislation turns on the problem that insurance contracts are filled with incomprehensible language that fails to put consumers and regulators on notice as to what is and is not covered.
Insurers learned of the storm-surge problem decades ago, and had the option of simply modifying their policies to say, “we don’t cover damage caused by hurricane storm surges.” Yet, you won’t find anything so straightforward in their contracts — most do not even mention hurricanes or storm surges in the exclusions at all.
An established legal doctrine called contra proferentum requires that courts resolve any contract ambiguities against those who drafted the contract. Commentators almost unanimously predict that “knowing that ambiguities will be interpreted in favor of the policyholder encourages carriers to use clear language.” Yet, contrary to this prediction, rampant ambiguities persist.
After providing a three-part explanation for the ambiguity, the author makes this noteworthy reference to Mississippi. (citations posted with the article)
As the Mississippi Supreme Court and many commentators agree, consumers buy insurance not just for “risk aversion” but also for “peace of mind”.
We haven’t had much peace of mind since Katrina. Frankly, I’m not certain when we will. I now believe that peace of mind and insurance litigation can not exist concurrently. In fact, insurance litigation may be the proximate cause of a lack of peace of mind.
The concurring cause rule (and efficient proximate cause rule) is a default rule of coverage. And, unlike mandatory rules or rules of interpretation, parties can contract around a default rule.
However, parties can only contract around a default rule of causation if they know there’s a rule and understand it’s meaning – some states actually share my opinion and consider the reasonable expectations of policyholders.
The law of causation is a prime example of the information few people know about and even fewer use when purchasing insurance…The rules of insurance policy interpretation should comport with common sense and the understanding of the parties to the contract. That way, insurers and policyholders are in a much better position to make sound insurance transaction decisions. In the case of causation theory, we would be well served by getting rid of “proximate cause,” “concurrent cause,” “efficient proximate cause,” and other jargon as a prologue to the development of a set of simple and cogent doctrines.
Some think it apparent from the language of the ACCC that the ACCC is intended to exclude not only concurrent causes, but also efficient proximate causes. It certainly feels that way at times and, understandably so, as insurers know that they can always deny that the ambiguity really exists, instead claiming that “logic” and “plain reading” settles the meaning of terms.
I’ve read enough at this point to understand the logic of those who work in the industry is very different from that applied by most policyholders. Since most who write on causation are lawyers that in somewhat equal numbers represent either the industry or policyholders, I have no doubt about the advantage the industry holds in negotiating claims and litigation – and, that insurance is a contract with performance after the fact; so, a risk exists for both the insurer and the insured.
I add to this knowledge the experiences of those on the Coast who were slabbed and the impact the current litigation is having on our courts and our communities.
The Deputy Chairman of Lloyd’s attributes the increase in litigation to “a lack of honour.” He writes that, “using the legal system to reduce a claim that an insurer or reinsurer knows ought to be paid is dishonourable.”